Introduction

At the tail end of the last century, as most studies on China hailed the dawn of a new economic superpower, other research highlighted the emergence of a tightly interlocked diaspora whose combined corporate power through business “networks” would enable both China and Chinese entrepreneurs to emerge as a global force. Meanwhile, a popular narrative about Chinese business has grown up in reciprocal interaction with transnational studies. According to its exponents, contemporary Chinese capitalism has distinctive characteristics that facilitate its growth. Chinese culture and value systems determine decision making among firms owned by Chinese, while intra-ethnic networks, based on trust and kinship ties, help reduce transaction costs and diminish risks. These business networks are said to be tightly knit and embedded through interlocking ownership and interlocking directorships with strong dimensions of ethnicity and solidarity.

However, generational shifts have occurred which have had an important impact on decision making in business. In Southeast Asia, as a result of curbs on immigration introduced after the start of the Great Depression in the 1930s, obtaining citizenship has become increasingly difficult. The emergence of new identities among immigrants' descendants undermines claims that the Chinese act collectively to protect vested interests. When new generations take over, there is little evidence that they depend on Chinese networks and interlocking directorships to help develop their enterprise. Even so, many studies argue that Chinese of the diaspora normatively practise business networking, involving interlocking ownership ties, and that as a result they are now (with the rise of China) emerging as a major force in an increasingly globalized economy.

The key questions in this study are the following: To what extent does common ethnic identity and culture provide a basis for business alliances, local and global, involving interlocking directorships and stock ownership? How and when does group identity count?

This chapter will trace the creation and evolution of intra-ethnic corporate networks and organizational forms of business enterprise among Chinese-owned small- and medium-size enterprises (SMEs).